SAT allows Gensol Engineering to file its response to Sebi interim order

Gensol Engineering on Wednesday said the Securities Appellate Tribunal (SAT) disposed of its appeal but allowed the company to file its response on Sebi's interim order to bar the firm and its promoters from the securities market.

Last month, in an interim order, Sebi barred Gensol Engineering and promoters -- Anmol Singh Jaggi and Puneet Singh Jaggi -- from the securities markets till further orders in a fund diversion and governance lapses case.

In a regulatory filing, the company said the appeal filed by it before the SAT has been disposed of, granting it an opportunity to file its response to Sebi's interim order within two weeks.

It further informed that the markets regulator has given directions to hear the company within two weeks thereafter and pass an appropriate order within four weeks.

The tribunal has given no observations on Sebi's interim order, it stated.

The delay in the disclosure of the SAT order dated May 9 was mainly due to the vacancy in the office of the Compliance Officer, lack of an appropriate number of directors and Key Managerial Personnel, Gensol Engineering said.

The company is currently seeking legal assistance from its legal advisors and counsel with respect to preparing the response to the Sebi interim order.

About any financial implication, it said that the quantifiable financial impact on the company cannot be ascertained at this point in time.

In its order on April 15, 2025, the Sebi also debarred Jaggi brothers from holding the position of a director or key managerial personnel in Gensol until further orders.

The order came after the Securities and Exchange Board of India (Sebi) received a complaint in June 2024 relating to the manipulation of share price and diversion of funds from GEL and thereafter started examining the matter.

In a 29-page interim order, Sebi had said, "The prima facie findings have shown mis-utilisation and diversion of funds of the company (GEL) in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds". 

"The company has attempted to mislead Sebi, the CRAs (credit rating agencies), the lenders and the investors by submitting forged conduct letters purportedly issued by its lenders," the regulator had said.

The noticees 1, 2 and 3 (GEL, Anmol and Puneet Singh Jaggi) are alleged to have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules, it had added.

Sebi had noted that the promoters were running a listed public company as if it were a proprietary firm. GEL's funds were routed to related parties and used for unconnected expenses as if the company's funds were promoters' piggy banks.

According to the regulator, the company secured a total of Rs 977.75 crore in loans, of which Rs 663.89 crore was meant specifically for the purchase of 6,400 electric vehicles (EVs). EVs were procured by the company and subsequently leased to BluSmart, a related party.

The result of these transactions would mean that the diversions at some time need to be written off from Gensol's books, ultimately resulting in losses to the investors of the company.

The internal controls at Gensol appear to be loose, and through the quick layering of transactions, funds have seamlessly flowed to multiple related entities/individuals, Bhatia had said.

It had also directed the firm to appoint a forensic auditor to examine the books of accounts of Gensol and its related parties.